May 27 (Bloomberg) -- Pakistani Prime Minister Nawaz Sharif
hailed his meeting with Indian counterpart Narendra Modi as a
“historic opportunity” and said he’s ready for talks on all
topics to overcome years of mistrust.

Sharif, who met Modi in New Delhi on his first full day as
India’s leader, said the nations should end a cycle of
confrontation and focus on cooperation. Sharif has four years
left in his term, while Modi is fresh off winning the biggest
Indian election mandate in 30 years.

“I stressed to the prime minister that we have a common
agenda of development and economic revival, which is not
possible to achieve without peace and stability in the region,”
Sharif told reporters in New Delhi after meeting Modi. “I urged
that together we should rid the region of instability and
insecurity that has plagued us for decades.”

The meeting marks a fresh start for the nuclear-armed
neighbors, which have fought three wars since the British carved
up South Asia in 1947. Border conflicts and terrorist strikes
have undermined efforts to bring peace and boost trade between
India and Pakistan, which have a combined population of more
than 1.4 billion.

Modi said the two nations could “move immediately” to
improve trade ties while calling on Pakistan to prevent its
territory from being used for terrorism against India, Sujatha
Singh, the top bureaucrat in India’s foreign ministry, told
reporters in New Delhi today. Modi accepted invitations to visit
Pakistan and other nations in the region, she said.

Terrorist Attacks

“We want peaceful and friendly relations with Pakistan,”
Singh said. “However, for such relations to proceed, it’s
important that terror and violence is brought to an end.”

Modi invited Sharif and other leaders of the eight-member
South Asia Association for Regional Cooperation to attend his
swearing-in ceremony on May 26, an unprecedented move.

Modi and Sharif shook hands as they met today at Hyderabad
House, a former palace close to the ceremonial avenue in New
Delhi. The meeting was the second between prime ministers from
India and Pakistan since peace talks resumed in 2011 after
dialogue was shattered when Pakistani gunmen attacked Mumbai in
2008, killing 166 people.

Sharif won elections last year to become Pakistan’s prime
minister for the third time and has pledged to improve ties with
India. He’s on his first visit to India since 1991, when he
attended former Prime Minister Rajiv Gandhi’s funeral in New
Delhi. The country’s leaders last met in September in New York,
where they pledged to enforce the cease-fire in Kashmir, a
disputed border region.

Economic Ties

India’s economy will expand 5.4 percent in the fiscal year
through March 31, the International Monetary Fund predicts,
after averaging growth of more than 7 percent in the past
decade. Pakistan’s economic growth will slow to 3.1 percent in
2014 from 3.6 in 2013, the IMF forecasts.

While India and Pakistan share a 2,000-mile border and have
mutually understandable languages, trade between the nations
totaled $2.6 billion last year. That’s less than 0.5 percent of
India’s combined commerce with other nations, according to
government data.

Pakistan has yet to follow through on a November 2011
pledge to grant India most-favored nation status, which would
provide greater access to Indian exports. The move would remove
1,200 items from a banned list.

An attack on India’s consulate in Herat, Afghanistan, last
week underscored the challenges to improved ties between India
and Pakistan. Afghan President Hamid Karzai in an interview with
Headlines Today television channel yesterday blamed the Herat
strike on Lashkar-e-Taiba, a Pakistan-based group that India
says conducted the 2008 Mumbai attacks.

Obstacles Remain

Modi met with Karzai today in New Delhi. Singh, the Indian
foreign secretary, declined to comment on Karzai’s claim that a
Pakistan-based group conducted the Herat attack.

“While we want closer ties with Pakistan, I don’t think it
would be possible,” said Dipankar Banerjee, founding director
of the Institute of Peace and Conflict Studies in New Delhi, who
commanded troops on the border with Pakistan. “There are
elements within Pakistan strongly against any such moves. They
will try to put obstacles in the way of any rapprochement.”

Some progress on peace talks has been made even while
breakthroughs have been elusive. Eighteen months ago, India and
Pakistan agreed on a new visa regime to make travel between the
countries easier, a measure meant to spur regional trade and
establish trust.

Before Sharif’s visit, Pakistan released 151 Indian
fishermen it had detained and said it’s seeking reciprocal
measures. Modi welcomed the move on his Twitter account.

“I pointed out that we were at the beginning of our
respective tenures with a clear mandate,” Sharif told reporters
today. “This provides us with the opportunity of meeting the
hopes and aspirations of our peoples.